(Credit: Forbes) – The U.S. Small Business Administration (SBA) helps business owners access the funds they need to get their businesses off the ground, expand and succeed. These loans are often easier to qualify for than some traditional loans.
Still, SBA loan approval and funding can take much longer than most loans—often anywhere from 60 to 90 days. For that reason, SBA loans aren’t the right choice for business owners who need cash quickly.
Here’s what you need to know about SBA loan approval times and how they compare to other business financing options.
SBA’s Most Popular Loan Program: The SBA 504 Loan
The most popular and widely used SBA loan is the SBA 504 Loan. Offered by Certified Development Companies (CDCs) – like Lewis & Clark Development Group – the SBA 504 loan can be used to purchase equipment and real estate. Loans are available for up to $5 million with 1o-, 20-, and 25-year repayment terms.
While SBA loans can be easier to qualify for than other types of business financing, the application process is extensive. You must provide comprehensive documentation, including:
- A business plan,
- Copies of business and personal tax returns,
- Business balance sheets, along with
- profit and loss statements and a list of current business debts.
How to Get Approved for an SBA Loan
The SBA loan approval process takes 30 to 90 days from application to funding. However, this time frame can vary, but there are a few general stages in the approval process:
- Loan application. The SBA loan application process is more demanding than traditional lenders, and prospective borrowers must submit extensive supporting documents. For this reason, application preparation can take as long as 30 days. However, you can complete an application more quickly if you have already gathered the necessary documentation.
- Application review and underwriting. After an application is submitted, the lender will review your credit score and financials. This process typically takes between 10 and 14 days, including the underwriting process, but can take longer for lenders that aren’t in the SBA’s Preferred Lenders Program. Likewise, if collateral is required, the lender may order an appraisal during the underwriting process. Based on this review, the lender determines the loan amount and interest rate you qualify for.
- Loan Agreement. Following approval, it typically takes 10 to 21 days for the lender to prepare the loan agreement and commitment letter. During this time, you should review the loan agreement to ensure that all terms are acceptable.
- Closing and funding. Closing and funding generally occur seven to 14 days after finalizing the loan amount, repayment term and interest rate in the commitment letter. If the lender contacts you with questions or additional requests during this period, respond quickly to keep the process moving.
How Will I Know If My SBA Loan Is Approved?
You can check on the application process with LCD Group or check your application status online. If approved, both LCD Group and the SBA will notify you directly.
How Long Does It Take to Get SBA Loan Funds After an Approval?
After an SBA loan is approved, it usually takes around five days to 14 business days for disbursement of loan funds.
Don’t Fret. Trust the Experts. Let LCD Group Help Your Small Business.
Don’t worry or be intimidated at the thought of applying for an SBA 504 Loan. Contact LCD Group’s Small Business Assistance Team of Ashley Hruby and Derrick Becker today. Ashley and Derrick will take the hassle out of the process and help you grow your small business.
Learn more about how the SBA 504 Loan Program can help your small business.